Goldman employee leaked secrets

‘WRONG MAN ON TRIAL’:A lawyer for the former Goldman board member Rajat Gupta said there was wiretap evidence of the source, who should be tried

Reuters, NEW YORK

A person at Goldman Sachs Group Inc, who has not been identified or charged in a broad US insider-trading probe, was caught on a wiretap leaking secrets about Intel Corp and Apple Inc, a lawyer for former Goldman board member Rajat Gupta said in court on Friday.

Lawyer Gary Naftalis, in a heated exchange with US prosecutor Reed Brodsky during a pre-trial hearing, said the Goldman person leaked confidential information about the two companies to Galleon Group founder Raj Rajaratnam, who was convicted of insider-trading charges last year.

Gupta, the best-known corporate executive accused in a sweeping prosecution of insider-trading at hedge funds in recent years, denies criminal charges that he tipped Rajaratnam with Goldman Sachs and Procter & Gamble Co secrets between 2007 and 2009.

Gupta’s trial is scheduled to begin in May.

“In a letter, he [Brodsky] said the government had a person who provided confidential information to Raj Rajaratnam about Apple and Intel,” Naftalis said. “There is also wiretap evidence, substantial evidence of another source at Goldman Sachs.”

Naftalis told US District Judge Jed Rakoff that the defense believed “there is a much more circumstantial case that person should be sitting in the box rather than us” and “the wrong man is on trial here.”

A theme of Gupta’s defense is that the charges brought by US prosecutors in October last year are circumstantial and that Rajaratnam had a host of sources tipping him with information. A jury convicted Rajaratnam largely on wiretaps, which traditionally have been used in organized crime and narcotics cases, not white-collar investigations.

Rajaratnam, once a friend of Gupta’s, is serving an 11-year prison sentence. Gupta was onetime managing director of McKinsey & Co and sat on the boards of several companies.

The judge ended the late afternoon hearing in Manhattan federal court, but Brodsky and Naftalis continued to argue. Brodsky declined to comment.

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